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Deutsche Bank CFO James Von Moltke Welcomes Volatility

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The global chief financial officer of Deutsche Bank believes the market volatility of recent weeks will help the banking giant as emerges from a difficult period of scandal and poor performance.

James von Moltke, who has an Australian mother and a German father and carries an Australian passport, is helping steer Deutsche through a restructuring process, including by lifting the performance of its trading division. As with most banks around the world, low volatility has weighed on trading volumes and earnings.

“The recent increase in volatility, which was expected, is good for the business, no question,” Mr von Moltke told The Australian Financial Review at Deutsche’s Melbourne office.

“An adjustment in the marketplace away from the complacency that existed the last year is frankly warranted,” he said.

While Mr von Moltke’s Australian connections see him regularly visit these shores, his German heritage was one of the reasons he decided to join Deutsche Bank in mid-2017 in the midst of its dramatic restructuring.

His is a famous family name in Germany; Mr von Moltke’s grandfather, Helmuth James Graf von Moltke, was a well-known member of the resistance group that stood against Adolf Hitler.

“Of course for me from a nationality perspective, it had the irresistible appeal of going back to at least one of my two home countries,” Mr von Moltke said of his decision to join the bank and leave the US, where he was working for Citigroup.

“It seemed to me like an opportunity that I couldn’t resist.”

Mr von Moltke’s expertise in restructuring, earned particularly during his eight-year stint at Citigroup, was also key to his move.

Deutsche Bank emerged from the global financial crisis with its reputation badly damaged and mired in a series of scandals.

Last year it agreed to pay $US7.2 billion to settle a case with the US Department of Justice over the mis-selling of bonds, and was hit with fines from the British government over failing to prevent the laundering of $US10 billions of Russian money.

The bank’s financial performance has also been below par. In addition to settling legal matters, chief executive John Cryan has led an extensive restructuring process that has seen Deutsche combine its retail and commercial banking operations and move to spin off its asset management arm.

Deutsche Bank’s shares have fallen 20 per cent in the past 12 months, in stark contrast to the strong rises seen at the big investment banks in the United States.

But Mr Cyan said earlier this month the bank’s annual results – a loss of €0.5 billion for 2017, but its first pre-tax profit since 2014 – showed it had “put our house in order that we are on the right track”.

Mr von Moltke said that while there was still plenty of work to do in turning the group’s performance around,real progress had been made.

“The plan that we needed to put the problems of the past behind us, financially and otherwise, was absolutely true – you can’t move on carrying baggage. And then secondly this process of fixing some of our core technology and data processes and control capabilities, is another thing that we needed to focus on.

“While we made significant progress in building and fixing the foundation, obviously we are trying to manage the business, build the business, be with clients, grow revenues and improve profitability.”

Mr von Moltke said Deutsche Bank’s Australian franchise had held up well despite the global problems. Australian managing director Anthony Miller said he was looking forward to some clear air as the restructuring and remediation process gathered pace.

“We need 12 months where we get out in front of clients and do what we do really well and two things will happen – we will drive the income revenue that we are looking for and that in turn will engage our staff and remind them why they are part of our team.”

One of Mr von Moltke key tasks is to keep cutting costs inside Deutsche Bank without curtailing its ability to grow.

“One of my messages around our bank is that it’s 97,000 people, all of whom have to make decisions every day that affect costs. We are absolutely committed to our cost targets, and it is vital that we remain disciplined and become even more disciplined in some respects,” he said.

“I think companies too often go for sweeping announcements about numbers of employees, about costs over time … I think this is in some ways counter-cultural. In other words it makes it seem like cost is a one or two-year project and then you go back to business as usual.”

Some pundits have suggested Deutsche might be best to exit the ultra-competitive world of investment banking, but both Mr von Moltke and Mr Miller were quick to play down such suggestions.

“It’s who we are; you can’t wish away your starting point in terms of your business,” Mr von Moltke said.

“Deutsche Bank was founded to support corporate clients on an international level, which is the core of our corporate-led investment bank until today.”

While he describe Brexit as a “regrettable thing at least for the European economy”, he said it would emphasise the importance of Deutsche Bank’s home market.

“Once Brexit happens we are really the only fully capable Eurozone investment bank and Euro clearer.

“When I travel to a place like Australia the Australian government and clients look to us as a gateway to the eurozone increasingly.”

Another challenge in bringing expenses down is that big banks keep getting hit with regulatory change – be it the new MiFID rules in Europe, or the Basel III banking regime.

While Mr von Moltke was not enough across Australia’s banking sector royal commission to comment on its progress or outcome, he said the impact of any new legislation on the sector did need to be considered by regulators.

“It’s really challenging because the nature of the business is, regardless of what part of financial services you are in, highly complex. This means that it’s easy to get unwanted consequences when you pursue new regulatory initiatives.”

By James Thomson

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SPDC disburses N41.1bn on Rivers, other states’ projects

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The Shell Petroleum Development Company of Nigeria Limited has spent a total of N41.1bn ($228m) to fund development projects in Rivers, Delta, Bayelsa and Abia states in the last 13 years.

The General Manager, External Relations, SPDC, Mr Igo Weli, disclosed this during the inauguration of one of the projects in Yenagoa, Bayelsa State. The event was organised by the Tarakiri Cluster Development Board and the Oporomor Cluster Development Board.

The SPDC is the operator of a joint venture agreement involving the Nigerian National Petroleum Corporation, Shell, Total Exploration and Production Nigeria Limited and Nigerian Agip Oil Company Limited.

At the events, 24 completed projects for 2019 valued at N496.9m were handed over to Tarakiri Cluster communities while those of Oporomor Cluster communities for 2019 were valued at N737.4m.

Beneficiaries of the Tarakiri Cluster communities were given as Ayamasa, Agbere, Isampou, Ofoni, Agbidiama and Egbemo-Angalabiri communities, all in the Ekeremor Local Government Area of the state.

The benefiting communities under the Oporomor Cluster are Peretorugbene, Amambolou, Oweigbene, Ndoro I, Ndoror II, Tamogbene and Norgbene, also in the Ekeremor LGA.

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AfDB Advocates disclose $1.8tn AUM for Investment

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In line with driving development in Africa, the President of the Africa Development Bank (AfDB), Dr. Akinwunmi Adesina, has announced the need to mobilise mutual funds and other Assets Under Management (AUM) in the continent put at $1.8 trillion, to drive Africa’s development. He disclosed this in an interview on the sidelines of the just-concluded 2019 Annual Meetings of the World Bank and International Monetary Fund in Washington DC recently.

He also said commercial banks who desire to get credit lines from the AfDB would have to increase lending to women-focused businesses, saying the bank was set to launch a rating for women- focused lending.

Through mobilising capital to accelerate growth in the continent, he stated: “Africa today has in its pension funds, sovereign wealth funds and insurance mutual funds $1.8 trillion of asset under management.

“Those sovereign wealth funds and pension funds are being invested outside of Africa in money market instruments that are generating negative real yield of returns.”

He added: “So what we are working on at the AfDB is how do we get the pensions and sovereign wealth funds to invest in Africa.

“Africa Sovereign funds shouldn’t be invested in other sovereigns, it should be invested in Africa to create better wealth and better environment and quality of lives for our people. For me that is very important.”

Speaking further, he said: “The other thing is in terms of stimulating growth is the role of capital markets. The AfDB is supporting strongly the development of capital markets to be able to mobilise domestic savings and to drive investments in the economy.”

The AfDB boss mentioned that, the bank has been able to mobilise $3 billion for small and medium scale enterprises (SMEs). And AfDB was planning to launch what he described as a Women Financing Index for Africa.

Under the arrangement, all financial institutions in Africa would be rated based on their lending to women. The ratings, he said would be both in terms of the volume of lending and in terms of the lending that they give as well as its impact on women.

In addition, he said, “So, those who lend more to women will get more resources from us and those who are lending more can get more resources at a discounted rate from the bank; so, you can lend more and have more impact for women.

“I will like to see financial institutions in Africa being held fully accountable when it comes financing women. The reason for that is very simple. For me, women run African economies and I think we need to support them and helping them get the financing that they need.

“It is part of a bigger agenda that we have where we are supporting women, this in particular is very strategic. We would help to minimise $3 billion for women businesses.

“I think when Africans get the issues of women right, we can get everything right. We provide funding through Affirmative Finance Action for Women in Africa (AFAWA) that will help to mobilise funding for women in Africa.” He noted.

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Access Bank’s hits N1bn digital lending Daily

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As part of its achievements, the leading financial institution Access Bank has expanded digital lending portfolio through  given Nigerians instant and  access to funds for insurgencies without any collateral, and has hit N1bn daily in loan value.

The Executive Director, Retail Banking, Access Bank Plc, Victor Etuokwu, said in a statement, “We are at the forefront of digital lending across the continent. This is a deliberate choice we made when we introduced the first USSD based digital lending product in Nigeria based on our deep understanding of our operating environment.

“In the past two years, we have disbursed loans to over 3.5 million  individuals. We acknowledge it is no mean feat when compared to where the market is coming from, but this is still a scratch in the overall potential of this market.

“This year alone we have disbursed over N45bn in over 2 million disbursements to individuals and have recently witnessed a spike in our volumes hitting N1bn daily. This achievement and our focus on retail lending reiterate our commitment to democratise access to financial services leveraging digital technology.”

Since the launch of Access Bank’s digital loan portfolio with PayDay Loan as the flagship product, Access Bank said it had continued to expand its loan portfolio using its proved innovative algorithms and deep machine learning capabilities.

The bank’s retail innovation journey had led it to expand its digital loan offerings to other multi-tenured variants to fit the needs of its diverse retail customer segments, it added.

Access Bank also launched a dedicated loan application platform known as QuickBucks in the third quarter of 2018; a Mobile Banking Application for digital loans aimed at improving customers borrowing experience for retail loans.

As part of its commitment to deepening digital finance, the bank said it had gone a step ahead to provide access to phone ownership as it recently launched a 12-month device ownership scheme where any salary earning customer could select a phone of his choice from its QuickBucks app and walk into any of its partner outlets across the country to pick up the phone.

The Head Digital Banking Business Development, Access Bank, Chinedu Onuoha, said, “Our objective is to ensure that there is a digital loan product for every adult Nigerian who has proven means of livelihood because we know that every individual at one point or another requires some form of financial support.”

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